Santos
’s technical vice-president
Diana Hoff
admits it wasn’t the famed wine regions around Adelaide that lured her away from her beloved Denver – rather the opportunity in the Cooper Basin for unconventional gas.

Three years after joining Santos, Hoff, a petroleum engineer by training, is still excited about what she’s seeing in Australia.

“It’s a great place to be if you’re a believer in the unconventional types of wells and programs," Hoff says in an interview at Santos’s headquarters in Adelaide.

“It took a lot for me to leave Denver . . . it was really about the potential here and the ability to come in early and work with people and crack the code, so to speak, on how to get the gas out of the ground."

Hoff is leading the drive in Santos’s upper executive ranks to match up the experience from North America’s more mature unconventional petroleum with local knowledge of the geology of the Cooper Basin, all with the aim of cutting the costs of drilling.

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“We’ve tried to blend the expertise we have within the company and the understanding of the local rocks and the desert conditions and blend that in with folks from North America who have gone through the learning curves on the unconventionals and understand things to make the well processes much more efficient," says Hoff.

“That leads to making the wells lower cost and more economic; that’s the big picture of what we are trying to do."

Early stages

Compared with the US, the unconventional oil and gas sector in Australia is still in its very early stages.

Santos started production at the first commercial shale gas well, Moomba-191, last year, but Hoff readily admits there’s a long way to go before the play can be said to work.

“One well doesn’t make or break," she says. “While we are pleased that Moomba-191 is a commercial well we also know there is more work to be done. Every well is a learning opportunity and that’s the way you have to look at it.

“It’s about understanding the ­reservoir and about fine-tuning how you build the wells to make them cost efficient."

Santos, which has decades of experience in conventional gas production from the Cooper Basin, will drill its first horizontal well later this year as it embarks of a program of 15 to 20 wells over the next several years. Only after fracturing and tests, plus extensive studies and analysis, would a larger scale production operation get under way, economics permitting.

In the meantime Hoff is calling on her 20-plus years of experience in the US at companies including coal seam gas and tight gas pioneer Barrett Resources and shale player Questar Exploration & Production to drive cost reductions at drilling operations in tight gas wells in the Cooper Basin and at coal seam gas wells in Queensland.

Impressive results

The results have been compelling. Techniques such as multipad drilling, where several wells are drilled form one site, and simultaneous operations, where various activities are tightly coordinated to increase efficiency, have helped cut costs at the Roma CSG field in Queensland by 40 per cent, and by 30 per cent at Fairview.

At the Cowralli tight gas site in the Cooper Basin, where 16 wells are being drilled from one “pad", reductions in time and cost of drilling are reaching 15 per cent to 20 per cent.

Hoff says savings on hydraulic fracturing of a well should reach about 50 per cent. The total well payback period should be cut but about 12 months.

“It’s not rocket science but it just makes things really efficient, better utilises your resources and reduces your cost structure," she says. “Some people call it a manufacturing style."

Australia’s high-cost structure and the lack of depth of its petroleum services sector makes cost reductions all the more important.

“That’s a real reason why we have to get efficient – because the cost structure starts higher and you don’t have a lot of excess services, so you have to be really smart about how you utilise those services," she says.

Asked about the lessons to be learned for Australian companies from North America, Hoff points to the benefits of close integration between engineers within a company.

“That’s what really leads to a lot of the efficiencies: people fully understand a project and how what they do impacts the whole," she says. “Everybody is very focused on what is the critical path to deliver wells."

Externally, companies need to engage more with communities and the public.

“We’re a pretty technical business and sometimes we fail to make it simple and sometimes we just talk like engineers and we don’t do that as well as we’d like," says Hoff.

“That is one of the learnings out of North America: you really have to be part of the communities as you go through and do this work."